In the 1/8/12 New Hampshire debate, Rep. Paul responded to a local newspaper correspondent that “Everybody knows supply and demand” about whether LIHEAP (a program for low-income individuals to acquire heating oil) was deserving of recent cuts. WRONG. I argue that many people don’t know supply and demand, and that’s the problem.
Rep. Ron Paul is one of the most economically bright candidates Republicans are running, and while I disagree with a lot of his foreign policy views, he is wrong here. Not everybody knows supply and demand. (See here and here.)
I think that “The Price of Everything: A Parable of Possibility and Prosperity” should be taught in basic economics classes. If people don’t understand why parking prices go up when the World Series is downtown, or why prices for goods rise right after a disaster, then people do not understand supply and demand.
Ron Paul, I think, is giving people too much credit. If everybody understood simple economics like supply and demand, we’d have better outcomes in government.
But we don’t, and it’s not really the fault of politicians — it is the fault of voters. Everybody should read “The Myth of the Rational Voter: Why Democracies Choose Bad Policies”